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LEASES

9 Months Ended

Sep. 30, 2024

8)	LEASES

The Company currently has operating leases for office in the borough of Manhattan in New York, New York, and Cambridge, Massachusetts, which expire in 2026 and 2028, respectively.

In addition, in October 2022, the Company entered into a sublease with a subsidiary of Bristol-Myers Squibb Company, as sublessor (“Sublessor”), for office, laboratory and research and development space of approximately 45,500 square feet in Somerville, Massachusetts. The sublease provided for base rental payments of approximately $0.5 million per month as well as monthly payments for parking and the Company’s share of traditional lease expenses, including certain taxes, operating expenses and utilities. The Company paid the Sublessor a security deposit in the form of a letter of credit in the amount of approximately $4.1 million.

On May 3, 2024, the Company received a notice from the Sublessor regarding past due rent payments of approximately $2.3 million, including amounts related to property taxes and common area maintenance costs, that the Company did not pay for the months of February, March, April and May 2024. Failure to pay the past due rent payments in full, plus approximately $70,000 in late fees and interest, within five business days from the date of the notice constitutes an event of default under the sublease.

The Company also did not pay the rent for June, July or August 2024 and, as of August 1, 2024, owed approximately $4.0 million in the aggregate in past due rent. On August 5, 2024, the Sublessor drew down on the letter of credit for the full $4.1 million to cover the approximately $4.0 million of past due rent payments, plus interest and penalties.

On August 9, 2024, the Company and Sublessor entered into a sublease termination agreement, effective August 31, 2024. The sublease was originally scheduled to expire in 2033. Pursuant to the sublease termination agreement, the Company agreed to the following: to surrender and vacate the premises; that the Company’s right, title and interest in all furniture, fixtures and laboratory equipment at the premises will become the property of the sublessor; and that both parties will be released of their obligations under the sublease. As a result of the sublease termination, the Company recognized a gain on lease termination of approximately $1.6 million for the three and nine months ended September 30, 2024, which includes a loss on disposal of fixed assets of approximately $0.5 million.

For the three and nine months ended September 30, 2024 and 2023, the net operating lease expenses were as follows (in thousands):

NET OPERATING LEASE EXPENSE

	2024			2023			2024			2023
	Three months ended September 30,						Nine months ended September 30,
	2024			2023			2024			2023
Operating lease expense	$	1,110		$	1,623		$	4,380		$	1,758
Sublease income		(21	)		(21	)		(63	)		(63	)
Variable lease expense		225			6			887			18
Total lease expense	$	1,314		$	1,608		$	5,204		$	1,713

The tables below show the beginning balances of the operating ROU assets and lease liabilities as of January 1, 2024 and the ending balances as of September 30, 2024, including the changes during the period (in thousands).

	Operating Lease ROU Assets

Operating lease ROU assets at January 1, 2024	$	32,781
Adjustment to ROU asset for remeasurement of
Somerville Sublease liability		4,245
Write-off of Somerville Sublease ROU asset		(34,857	)
Amortization of operating lease ROU assets		(1,450	)
Operating lease ROU assets at September 30, 2024	$	719

	Operating Lease Liabilities
Operating lease liabilities at January 1, 2024	$	35,070
Adjustment to lease liability due to remeasurement of Somerville Sublease		4,245
Accretion of interest for Somerville Sublease		2,465
Write-off of Somerville Sublease liability		(36,924	)
Principal payments on operating lease liabilities		(4,121	)
Operating lease liabilities at September 30, 2024		735
Less non-current portion		534
Current portion at September 30, 2024	$	201

As of September 30, 2024, the Company’s operating leases had a weighted-average remaining life of 3.3 years with a weighted-average discount rate of 10.23%. The maturities of the operating lease liabilities are as follows (in thousands):

	As of September 30, 2024
2024	$	69
2025		274
2026		267
2027		163
2028		82
Total payments		855
Less imputed interest		(120	)
Total operating lease liabilities	$	735